Bayer and Monsanto are two multinational companies that are major global manufacturers of agrochemicals and seeds, including genetically modified seeds. In May 2016 these companies announced a merger that would realise a shared vision of integrated agricultural offerings and creating a leading innovation engine for the next generation of farming.
The Rural Women’s Assembly (RWA) interviewed Mariam Mayet from African Centre for Biodversity on the implications of this merger for rural women in the region.
Q: Please give us a background to the Bayer-Monsanto Merger
MM: Bayer and Monsanto are major manufacturers of agrochemicals, improved and genetically modified (GM) seed. Bayer, one of the world’s largest agrochemical companies, has an extensive agrochemical portfolio in South Africa, while Monsanto, the world’s largest seed company, operates in both seed and agrochemicals, particularly herbicides. Monsanto is also a pioneer of genetic modification of agricultural crops and the largest maize seed company in South Africa by sales. Most importantly, South Africa’s core agricultural markets of maize and soya are dominated by Monsanto’s GM traits which are licensed out to other companies for use.
In May 2016, Bayer started the bidding process for Monsanto. Monsanto shareholders accepted the bid for US$6 billion in December 2016. If the merger is approved by commission authorities in 30 countries, the new Bayer-Monsanto will be the world’s largest seed and agrochemical company. The Bayer-Monsanto merger has been driven by factors which involve:
a) Financial drivers including; the need to reduce the cost of operations, research, and development while maintaining market share and profit levels; large investment funds where institutional investors own shares in the companies and low-interest rates which enable access to cheap capital.
b) The need to own germplasm and traits to remain competitive; where the companies want to access proprietary technologies owned by other companies to be able to generate new products. Control of big data; Bayer notes that one of its prime reasons for acquiring Monsanto is because it owns The Climate Corporation, which has the most powerful data science engine and the most extensive field research network
c) Control of big data; Bayer notes that one of its prime reasons for acquiring Monsanto is because it owns The Climate Corporation, which has the most powerful data science engine and the most extensive field research network
d). The need to find new markets; increased operational, regulatory and research and development costs are forcing seed companies to grow in size to realize economies of scale and the expected return on investment.
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